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FM AMEMBASSY MINSK
TO RUEHC/SECSTATE WASHDC 0679
INFO RUEHZG/NATO EU COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUEHVEN/USMISSION USOSCE 0045
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEHSK/AMEMBASSY MINSK 0689

UNCLAS SECTION 01 OF 04 MINSK 000047 
 
SIPDIS 
 
FOR EUR/UMB (ASHEMA) 
FOR DRL (DNADEL) 
FOR EUR/ACE (KSALINGER) 
EMBASSY KYIV FOR USAID (JRIORDAN AND KMONAGHAN) 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PHUM ECON ENRG BO
SUBJECT: BELARUS BI-WEEKLY POL/ECON REPORT - FEBRUARY 12, 2010 
 
REF: A. A: MINSK 032 
     ¶B. REF: B: 09 MINSK 426 
 
MINSK 00000047  001.3 OF 004 
 
 
¶1.  The following are brief items of interest compiled by 
Embassy Minsk. 
 
TABLE OF CONTENTS 
 
Civil Society 
------------- 
- GOB Crackdown on Polish Minority Group Raises Tensions 
- One Year of Pretrial Detention for Two Vaukavysk Activists 
- Presidential Edict: Possible Move To Control the Internet 
- Despite the Constitution Alternative Service Is Not An Option 
 
Economy 
------- 
- Belarus Coming to Grips with Limited Duty-Free Russian Oil 
- GOB Satisfied with Russian Electric Supply and Transit 
Agreement 
- IMF: Economy is Fragile, Some Encouraging Signs, But What Next? 
- Gazprom Contract Remains Unchanged Despite GOB's Expectations 
 
Quote of the Week 
----------------- 
 
------------- 
Civil Society 
------------- 
 
¶2. GOB Crackdown on Polish Minority Group Raises Tensions 
 
A series of moves by authorities against a Polish minority group 
in Belarus not recognized by the GOB has triggered a diplomatic 
response by the Polish government.  According to press reports, 
the Polish MFA conveyed its "serious concerns" through the 
Belarus ambassador in Warsaw, while recalling its ambassador 
from Minsk for two days of consultations.  These actions 
followed a police raid, February 8, on the Polish House in the 
Ivyanets of the local Warsaw-backed Union of Poles of Belarus 
(UPB).  Management of the Polish House (educational and cultural 
center) was cited for "illegal possession of property" (Ref A). 
Seizure of the Ivyanets facility leaves only two of the original 
16 UPB-run Polish Houses remaining in Belarus, one in Barysau, 
the other in Baranavichy.  Press reports also quoted Polish FM 
Radoslaw Sikorski as saying that "respect for the rights of 
national minorities and the opposition are conditions for 
rapprochement between Belarus and the EU."  In related actions, 
a Hrodna-based company Polonica, headed by UPB leader Anzhelika 
Borys, was fined $25,000 on February 5 over purported tax 
evasion in connection with receiving money from the Polish 
organization "Wspolnota Polska."  Polonica has provided support 
for Polish Houses that promote Polish culture and language in 
Belarus.  Also on the same day, the court fined Borys $1,500 in 
absentia.  In a separate incident on February 5, Borys' car was 
vandalized in Hrodna.  On February 10, over 200 UPB activists 
and supporters held a peaceful unsanctioned demonstration of 
solidarity to remember Polish victims of Stalinist purges in the 
1930's.  Police closely observed and recorded the meeting but 
did not interfere, and no detentions were reported. 
 
¶3. One Year of Pretrial Detention for Two Vaukavysk Activists 
 
Two Vaukavysk activists, Mikalay Autukhovich and Uladzimir 
Asipenka, have now spent more than a year in pretrial detention 
awaiting conclusion of criminal investigations against them and 
a Supreme Court decision for scheduling a hearing date.  The 
court is also expected to rule on whether the two defendants 
will be tried in open or closed session. The two were arrested 
on February 8, 2009 on charges of arson and later elevated to 
terrorism allegedly targeting local officials in the Hrodna 
region.  Interior Minister Anatol Kulyashou said the case would 
not have been sent to the Supreme Court without substantial 
evidence, but he expects the case to be tried in open court. 
Autukhovich and Asipenka remain in custody at a pretrial 
detention center in Minsk. An associate, Yury Lyavonau, also 
arrested February 8, 2009, was unexpectedly released in August 
2009 and cleared of charges on September 24, 2009. 
 
¶4. Presidential Edict: Possible Move To Control the Internet 
 
 
MINSK 00000047  002.3 OF 004 
 
 
President Lukashenka signed on February 1 an edict on use of the 
Belarus national segment of the internet.  Officially described 
as aiming to improve usage of the internet, the Presidential 
Operational and Analytical Center (OAC), an agency in charge of 
maintaining information security, stated that the edict was 
adopted "for people and the care for people."  According to 
official claims, the document is based on "the experience of 
leading countries, including Germany, Sweden, the U.S. and 
France," as well as "Kazakhstan which is well advanced in this 
area."  Communications Minister Mikalay Pantsyaley asserted that 
"every user will have the right to ask his or her provider to 
limit access to certain sites."  The CEO of a software company 
and owner of the popular TUT.by news portal, Yury Ziser, 
commended the GOB for significantly amending the original 
"repressive" version of the edict (Ref B), saying the proposed 
regulations have been "changed for the better."  However, Ziser 
underscored that "much will depend on how the proposed measures 
are implemented by the GOB."  The edict, not yet in final form, 
awaits cabinet review by the Council of Ministers and issuance 
of specific provisions and regulations.  Activists and 
independent media fear the edict will permit the GOB to block 
access to opposition web sites, especially important in the 
run-up to the presidential 2011 elections.  Civil society 
representatives continue to express concern about provisions 
that will require internet service providers to identify 
subscriber devises and services provided to clients, describing 
the edict as a means of "controlling information that is 
distributed over internet." Belarusian Association of 
Journalists Chairwoman Zhana Litvina called upon the GOB to 
submit the edict to international experts for their assessment 
to establish whether it is consistent with international 
standards. 
 
¶5. Despite the Constitution Alternative Service Is Not An Option 
 
GOB continues to deny youth their right to alternative civilian 
military service as guaranteed by the Article 57 of the Belarus 
Constitution.  Despite Belarus' international human rights 
commitments, the GOB has failed to enforce a mechanism of an 
alternative service for those army recruits who seek civilian 
service due to their religious beliefs.  On February 1, a court 
in Minsk sentenced Ivan Mikhaylau, a member of a Messianic 
Jewish community, to three months in jail for allegedly avoiding 
compulsory draft.  Mikhaylau had been in pretrial detention 
since his arrest on December 15 after he refused to appear at a 
conscription office.  In addition, Mikhaylau's sister was 
expelled from a vocational school on February 10 for missing 
classes on February 1 when she attended her brother's trial.  In 
a separate case in Homyel, a local court fined opposition 
activist Yauhen Yakavenka $60 for failing to comply with 
enlistment office summons to appear on January 29.  Yakavenka 
filed his third application for civilian service on February 2, 
citing that he was not "a draft-dodger and only wanted to 
exercise constitutional rights."  Opposition youth and civil 
society remain committed to promote their campaign For 
Alternative Civilian Services and urge the GOB to respect 
religious rights of recruits. 
 
------- 
Economy 
------- 
 
¶6. Belarus Coming to Grips with Limited Duty-Free Russian Oil 
 
According to the media, Russian Energy Minister Sergei Shmatko 
said at a news conference in Helsinki on January 29 that this 
year overall subsidies on Russian crude oil supplies to Belarus 
will amount to $2 billion. Citing new limits on the amount of 
Russian oil imported duty free under the recent oil agreement, 
Belarus' First Deputy PM Vladimir Semashko stated on February 2 
that terms for oil supply have changed "for the worse" for 
Belarus. The GOB has begun dividing the 6.3 million ton quota 
between Belarus' two oil refineries and the Belarusian Oil 
Company.  Applications by Russian companies that operate 
networks of filling stations in Belarus for allocations under 
the new terms were reportedly denied. Those companies are being 
directed to buy oil products from Belorusneft to supply their 
outlets.  According to various media reports, as of February 11 
duty free oil is not yet being provided to Belarus, which is yet 
to ratify the January 27 oil-supply agreement with Russia. 
 
MINSK 00000047  003.3 OF 004 
 
 
Belarusian officials are reportedly worried that as soon as the 
agreement is ratified, it will be harder to insist on an upward 
adjustment of oil delivery terms.  Russian Ambassador to Belarus 
Aleksandr Surikov told reporters in Minsk on February 10 that 
the duty-free oil supply quota for Belarus will not be increased 
above 6.3 million tons this year, adding that, if the signed 
agreement fails to be ratified, Belarus will lose the quota and 
will have to pay the full price for all supplies. 
 
¶7. GOB Satisfied With Russian Electric Supply and Transit 
Agreement 
 
According to media reports, Belarusian energy monopoly Belenerha 
and Russia's Inter RAO UES signed a contract on Russian power 
supplies to Belarus and power transit via Belarus to the Baltic 
countries and the Kaliningrad Region in 2010.  The two sides 
have reportedly agreed on "a well-balanced approach regarding 
both the supply and transit" of energy. "We are satisfied with 
the price, and they are satisfied with the transit terms," the 
General Director of Belenerha Alexei Shirma maintained on 
February 1 without elaborating on the details of prices and 
transit fees, referring to terms as "a commercial secret."  The 
transit of Russian electricity via Belarus is expected to 
increase in 2010. 
 
¶8. IMF: Economy is Fragile, Some Encouraging Signs, But What 
Next? 
 
According to the IMF staff report released on February 1, the 
country's macroeconomic stability remains fragile and needs to 
be reinforced as Belarus remains highly vulnerable to external 
shocks, given its high current account deficit and low level of 
reserves.  In 2010, it estimates that Belarus' external 
financing gap will be $2 billion.  Russia is no longer committed 
to providing the final $500 million tranche of a bilateral loan, 
but Belarus intends to apply to EurAsEC Stability Fund.  The IMF 
report adds that "the financing gap for 2010 beyond the program 
period could be filled by additional financial support from the 
Fund, if a successor arrangement is agreed upon."  The European 
Union could also provide $290 million in financial assistance if 
a follow on Stand By Agreement is adopted, but unlike in 
previous years the European Parliament, because of the Lisbon 
Treaty, must also give its consent as well.  The World Bank must 
also have the new IMF Stand By Agreement in place if it is to 
release $100-150 million dollars in 2010.  The GOB is also 
considering the possible issuance of a Eurobond, but IMF has 
advised the GOB not to seek too large an issuance as the number 
of buyers may be limited.  The Chairman of the National Bank, 
Pyotr Prakapovich, admitted in late January that Belarus would 
need additional external financing.  In preparing the ground 
work, although not having committed, the GOB and the National 
Bank have already sent a letter of intent to the IMF promising 
to maintain a tight credit policy in 2010 by limiting loans 
under government programs.  The IMF report notes several 
encouraging signs in the economy.  Export volumes have 
stabilized and are projected to recover.  The exchange rate 
depreciation during the year has improved competitiveness, while 
confidence appears to be growing among households, as evidenced 
by the partial reversal of currency substitution.  Fiscal policy 
has been consistent and strong, and the inconsistencies in the 
authorities' credit policies are being addressed.  The Head of 
the IMF mission to Belarus Chris Jarvis stated at a conference 
on Belarus' integration into Europe, which was held in Minsk on 
February 10, that Belarus is capable of managing the losses and 
external economic shocks caused by oil price increase if the 
country takes firm measures.  He also noted that keeping 
Belarus' national currency stable will be a major challenge for 
the country's banking sector this year.  To stimulate economic 
growth and reform, the GOB will need to continue cutting costs 
and reduce interference in economic processes.  Profitability 
and not government orders should be the basis for banks' lending 
decisions, Jarvis concluded.  The end of its visit, the IMF 
delegation concluded that it will recommend that the final 
tranche under the current SBA be released to Belarus this April. 
 However, the IMF Board's sentiments, according to Chris Jarvis, 
would be that any follow on SBA would have to include 
significant structural reforms with clear commitments by the 
GOB. 
 
¶9. Gazprom Contract Remains Unchanged Despite GOB's Expectations 
 
MINSK 00000047  004.3 OF 004 
 
 
 
According to press reports, Prime Minister Sergei Sidorski said 
on February 3 that Belarus expects to reach an agreement with 
Russia's Gazprom that the price of Belarus-bound natural gas 
will remain this year at the 2009 level.  Russian Ambassador to 
Belarus Alexander Surikov told the press in Minsk on February 10 
that Russia is not considering the possibility of reducing the 
gas price for Belarus this year. "The contract between Belarus 
and Gazprom was signed in 2006 and covers this year's gas trade, 
he said. The contract is effective, and no changes are 
considered now," he continued, but he did not completely rule 
out the possibility of new talks. Commenting on speculation in 
Belarus about Gazprom's possible participation in investment 
projects in the country, the ambassador declined to offer 
details, saying that "thus far we have (seen) only declarations 
(of interest)." 
 
----------------- 
Quote of the Week 
----------------- 
 
¶10.  The Chairman of the Chief Council of Warsaw-backed Union of 
Poles Andjei Pochobut told the press on February 10 that the 
Belarusian authorities should discontinue interference in the 
operations of the Union of Poles. 
 
"The conflict with the authorities emerged when, violating its 
own law, the Belarusian authorities tried to put "their people" 
at the head of our organizations and our members did not agree 
to it." 
SCANLAN